Download Basic Marketing, 16e

CHAPTER TWENTY
Managing Marketing’s
Link with Other
Functional Areas
For use only with
Perreault/Cannon/McCarthy
or Perreault/McCarthy texts.
© 2008 McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin
www.mhhe.com/fourps
When we finish this lecture you should
1.
2.
3.
Understand why turning a marketing plan
into a profitable business requires money,
information, people, and a way to get or
produce goods and services.
Understand the ways that marketing
strategy decisions may need to be adjusted
in light of available financing.
Understand how a firm can implement and
expand a marketing plan using internally
generated cash flow.
When we finish this lecture you should
4.
Understand how different aspects of production
capacity and flexibility should be coordinated
with marketing strategy planning.
5.
Understand the ways that the location and cost
of production affect marketing strategy planning.
6.
Know how marketing managers and accountants
can work together to improve analysis of the
costs and profitability of specific products and
customers.
7.
Know some of the human resource issues that a
marketer should consider when planning a
strategy and implementing a plan.
Marketing and Other Functional Areas Provide
Company Resources for Strategy Planning and
Implementation (Exhibit 20-1)
Resource Requirements for
Marketing Strategies and Plans
Finance
Production &
Operations
Accounting
Human
Resources
Marketing in the Broader Context
Cross-Functional Challenges Are Greatest With
New Efforts
New Product Cross-Functional Challenges
© 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The Finance Function: Money to Implement
Marketing Plans
Investor’s Time
Horizon Is
Important
Investors Expect
a
Return
What Is
Capital?
Key
Financial
Issues
Capital Comes
From Internal
and External
Sources
The CFO
Handles Money
Matters
Opportunities
Compete for
Capital/Budgets
Working Capital
Pays for ShortTerm Expenses
Forecasts May Become An Ethical Issue
Other Efforts to Raise Capital
Debt Financing
Has Interest
Cost
Interest Expense
May Impact
Prices
Expanding Profits
May Mean
Expanded Plans
Winning
Strategies
Generate Capital
Keeping the Money Flowing
Cash Flow – When
Money Is Available
Improve Return of
Investment
Marketing Mix Affects
Capital Needed
Production Must Be Coordinated with the
Marketing Plan
Bertolli
Pasta Sauce:
The only
leading
brand that
goes from
vine to jar in
just one day.
Marketing Implications of Production Problems
Slow Production
Quantity
Adjustments
Stock-Outs
Source
Scarce Supply
Wasted Marketing
Effort
Difficulty in New
Product Coverage
May Require
Staged Distribution
Need to
Produce Many
Product Lines
May Require
Outsourcing or a
Virtual Corporation
Where Products Are Produced Matters
Moving
Production to
Low-Cost
Countries
Task Transfer
Overseas
Production Has
Critics
Other Issues in Production
Mass
Customization
Serves
Individual
Needs
Producing to
Order
Requires
Flexibility
Mass
Customization
Is Not Mass
Marketing
Sometimes Batched Production Is Still Necessary!
Checking your knowledge
Wizard Parts Company, an auto parts manufacturer,
provides its customers with production flexibility. This
could help Wizard support its customers with:
A. Computerized reorder capabilities.
B. Electronic data interchange (EDI).
C. Just-in-time delivery (JIT).
D. Any of the above.
E. None of the above
Accounting Data Can Help in Understanding Costs
and Profits
Functional Accounts
Natural Accounts
•
•
Formal Financial
Accounting
Examples:
Salaries
Wages
Supplies
Raw Materials
•
vs.
•
Purposes for Which
Expenditures Are
Made
Examples:
Milling
Grinding
Maintenance
• Reclassify Natural to Functional
• Reallocate Functional Accounts
• Evaluate Profitability of Profit Centers
Cost Analysis Helps Track Down the Loser
(Exhibit 20-2)
Spreading Natural Accounts to Functional
Accounts (Exhibit 20-3)
Allocating Functional Costs to Customers
(Exhibit 20-4)
A More Detailed View of Costs
(Exhibit 20-5)
Profitability of Individual Customers and Whole
Company (Exhibit 20-6)
Checking your knowledge
Bill Thomas, marketing manager at ATI Services,
conducts marketing cost analysis. He is correct when he
says which of the following about marketing cost
analysis:
A. “Traditional accounting analysis fails to analyze the
purpose of marketing costs.”
B. “Marketing costs should be allocated to general
overhead.”
C. “Functional and natural accounts should usually have
the same names.”
D. “Functional accounts are the categories (like salaries
and raw materials) to which costs are charged in the
normal accounting cycle.”
E. All of these statements are true.
Checking your knowledge
Sharon Gage, marketing manager at Yellow Hat Supply,
wants to calculate the cost of marketing some of Yellow
Hat’s products to different target markets. Which of the
following will she probably have to do:
A. Reorganize some of he company’s functional cost
accounts into natural cost accounts.
B. Allocate personal selling expenses into general
overhead.
C. Reclassify all natural accounts into functional accounts.
D. None of the above because it is impossible to link the
costs of marketing to specific target markets.
People Put Plans Into Action
People – Important
Resources
New Strategies Mean
People Changes
Communication
Promotes Change
Growth Strains
Human Resources
Allow Time
for Training
Managing Changes
One Change May
Mean Several
Plan Time for
Changes
Key
Issues
Marketing
Enlivens the Firm
Cutbacks Mean
Planning
Interactive Exercise: Cross-Functional DecisionMaking
© 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
You now
1.
2.
3.
Understand why turning a marketing plan
into a profitable business requires money,
information, people, and a way to get or
produce goods and services.
Understand the ways that marketing
strategy decisions may need to be adjusted
in light of available financing.
Understand how a firm can implement and
expand a marketing plan using internally
generated cash flow.
You now
4.
Understand how different aspects of production
capacity and flexibility should be coordinated
with marketing strategy planning.
5.
Understand the ways that the location and cost
of production affect marketing strategy planning.
6.
Know how marketing managers and accountants
can work together to improve analysis of the
costs and profitability of specific products and
customers.
7.
Know some of the human resource issues that a
marketer should consider when planning a
strategy and implementing a plan.
Key Terms
• Capital
• Working capital
• Stock
• Debt financing
• Cash flow
•
•
•
•
•
•
statement
Production capacity
Virtual corporation
Task transfer
Mass customization
Natural accounts
Functional accounts